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Exam 4: Reporting and Analyzing Merchandising Operations

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Question 51

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Purchase returns refer to merchandise a buyer acquires but then returns to the seller.

A) True
B) False

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Question 52

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Why does Selena and Khary Cuffe's company,Heritage Link Brands,use a perpetual inventory system?

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The use of a perpetual invento...

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Question 53

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The periodic inventory system requires updating the inventory account only at the end of the period to reflect the quantity and cost of both the goods available and the goods sold.

Cost of goods sold represents the cost of buying and preparing merchandise for sale.

Which of the following accounts would be closed out with a debit?

Inventory shrinkage can be computed by comparing the ___________ of inventory with recorded quantities and amounts.

Sales returns:

The current period's ending inventory is:

A company had sales of $375,000 and its gross profit was $157,500.Its cost of goods sold equal:

On July 22,a company purchased merchandise inventory at a cost of $5,250 with credit terms 2/10,net 60.If the company borrows money at 12% to pay for the purchase on the last day of the discount period and pays the loan off on the last day of the credit period,what would be the net savings for the company?

______________________ are non-operating activities that include interest expense,losses from asset disposals and casualty losses.

Merchandise inventory:

Beginning merchandise inventory plus the net cost of purchases is equal to the merchandise available for sale.

A company has sales of $2,530,000,sales discounts of $200,000,sales returns and allowances of $323,000,shipping charges of $115,000,sales commissions of $234,000,net income totaled $863,500,and cost of goods sold of $1,012,000.What is the gross profit/margin ratio?

The gross margin ratio equals net sales less ___________ divided by net sales.

Explain the difference between the single-step and multiple-step income statements.

A company's current assets were $17,980,its quick assets were $11,420 and its current liabilities were $12,190.Its quick ratio equals:

Merchandise inventory is reported in the long-term assets section of the balance sheet.

Trade discounts are recorded in a Trade Discounts account in the accounting system.

The following information is for Trico and its competitor Unico. Required: Calculate the dollar amount of gross margin and the gross margin ratio to the nearest percent,for each company for both years. Which company had the more favorable ratio for each year? Which company had the more favorable change in the gross margin ratio over this 2-year period?